Mosul was fairly calm earlier this year as winter gave way to spring. Some nights at Forward Operating Base Marez, the major U.S. garrison in the multiethnic northern Iraqi city, explosions would boom as incoming fire missed its target. But veteran officers, who remembered when Mosul briefly fell to the insurgency in late 2004, celebrated what passed for Iraqi tranquility. The city's central roundabouts featured something rare to see in Baghdad during that time: people milling about, selling produce, cut-rate electronics, and mountains of jeans on flatbeds and donkey carts.

That calm is now gone, as al-Qaeda in Iraq and rejectionist Sunni insurgents have opted to abandon surge-bloated Baghdad and Anbar, where Concerned Local Citizen militias have a strong presence, for a place where a single U.S. combat battalion protects a city of 1.7 million people. Back then, though, it was almost boring.

Something sinister lurked behind that boredom. The city's Kurds and Sunnis looked to a fateful referendum over control of Mosul scheduled for the end of the year. Known as the Article 140 referendum after the provision in Iraq's constitution decreeing it, the referendum would ask residents of mixed-ethnic northern Iraq if they'd rather be ruled by the Kurdish Regional Government rather than by Baghdad. Kurds I interviewed, sure they'd triumph in the vote, promised war if the referendum didn't occur on time. Sunnis I interviewed, convinced the Kurds were right, promised war if it did. With a week and a half left in 2007, it's clear the referendum isn't going to happen. And with both insurgents and foreign terrorists set up in Mosul, Kirkuk, and their surrounding provinces of Ninewa and Tamim, the next powder keg of the Iraq War is due to ignite.

Even in March, Sunnis felt besieged. The political center of the Sunni community in the city is the Iraqi Islamic Party (IIP), which doesn’t actually hold any elected offices. It boycotted the 2005 provincial elections, a decision that has left Sunnis vastly underrepresented on the provincial council and that has contributed to a Sunni sense of inevitability to Kurdish territorial advances. At a meeting with U.S. diplomats in the IIP's mosque-cum-headquarters in March, party officials matter-of-factly declared that if the referendum advances -- a concession that the Kurds will win it -- there would be violence. "We don't believe that if Article 140 is implemented in less than four years it'll be just," said Faris Yunis, a party official in a drab olive suit. "A lot of blood will be shed by this," added his colleague, Mohammed Shakir. "There are a lot of people willing to die for that cause." It probably wasn't a mere prognostication. The IIP in the city, U.S. officials told me, has significant ties to local insurgents. They also told me that if new elections were held in the province, Shakir would likely become Ninewa's governor. Yunis and Shakir, in other words, are in a position to take Mosul’s Sunnis to war.

Making matters worse, the Kurds are both dismissive of Sunni concerns and quick to promise retaliation if the referendum doesn’t happen. It’s a position borne of the justifiable Kurdish grievance over Saddam Hussein’s ethnic cleansing of northern Iraq, and of their current U.S.-guaranteed political dominance in the area. The current governor, Duraid Qashmoula, is a Sunni brought to power by the Kurds, and he displays his loyalty. If the referendum takes place, "there will be no confrontation, no violence," he said, smoking a Pine cigarette in his office. "If I take over someone else's house and the owner asks for it back, what's wrong with that?" His vice governor, Khasro Goran, is a Kurd and is more direct about the stakes. "Article 140 is a constitutional article," he said. "If that article is not implemented, another violent front will open -- not just a Shiite-Sunni front but also a Kurd-Sunni Arab front. It's much better to solve the problem now." Asked about the IIP's request to delay the referendum, he said, "Their goal is not to delay implementation, but to kill the whole article." For good measure, Goran said the IIP "does not represent the Sunni Arabs at all, only a small sect."

The stakes of the referendum are as simple as they are large. A map printed by the Kurdish Ministry of Tourism earlier this year and given to me by anti-Kurdish political forces shows what the Kurds envision as their post-referendum frontiers. (When I presented it to Goran, the vice governor only contested minor portions of it.) Mosul would run along the southwestern quasi-border with Baghdad-controlled Iraq. And it's hardly the only city up for grabs. So is Kirkuk, the historic heart of Iraq's oil development. The loss of Kirkuk means the loss of billions of dollars in revenue for Baghdad, and the gain of Kirkuk will dramatically accelerate the viability of an independent Kurdistan. That is exactly why the Baghdad government has favored delay at all costs.

It's a smart strategy. Since Kurdish independence requires a measure of goodwill from both the region and the broader international community, the Kurds can't afford to be seen as the aggressors in a battle to redraw the boundaries of the Kurdistan Regional Government southward. That means the Kurds are boxed in. Last week, KRG Prime Minister Nechirvan Barzani -- son of Kurdish potentate Massoud Barzani, ruler of Irbil and Dohuk provinces -- came to Baghdad as a supplicant over Article 140 and got nothing. "What is important is that we emphasized during the meeting that the Kurds, as part of Iraq, wanted to resolve the problems in a brotherly manner and through dialogue," he gamely said after meeting with Shiite politicians. He could say little else.

But what the Kurds can do is influence the facts on the ground. Kurdish authorities have relocated unknown thousands of Kurds from the Kurdistan Regional Government into the disputed cities. The soccer stadium in Kirkuk is now home to over 2,000 Kurds living in squalor simply so they can throw the vote to Irbil, the Kurdish capitol. "By God’s name, they would cut off our food basket and not pay us our salary and give us nothing else and force us to go back," Hajji Walid Muhammad, a 67-year-old Kurdish cab driver explained to The New York Times. "They ordered us to go back." Kurdish coercion is not limited to the Kurds' own citizens. In March, Chaldean Christians in the ancient city of al-Kosh in Ninewa Province told U.S. diplomats that Kurdish pesh merga commanders had threatened them if they didn't vote to join the KRG in the referendum. One barometric indication of the balance of power is the Yazidi minority. Victims of one of the year's worst terrorist attacks, a blast that killed 500 near the Iraq-Syria border, the Yazidis have throughout history identified as either Arab or Kurdish, depending on whoever offered protection. They presently back the Kurds on the referendum.

So it's no surprise that the Baghdad government would opt to scrap the referendum rather than lose Mosul, Kirkuk, and other northern cities to Irbil. Of course, that means Nouri al-Maliki is now in the dubious position of violating the constitution, relegating the already-shaky rule of law in Iraq another casualty of the territorial dispute. It's a textbook example of how a hasty democratization process leads to political failure. Without clear, consistent, and applied standards for resolving the dispute, violence is inevitable. Concern is building in the international community. The United Nations' new Iraq troubleshooter, Staffan de Mistura, recently commented, "Not just for technical reasons but also for political ones, there is a need to look at a formula that will maintain the [referendum] process, and will not put it on the back burner."

Unlike in March, a new actor in Ninewa is ready to exploit Arab-Kurdish tensions: al-Qaeda. U.S. military commanders have recently observed a spike in violence in the disputed cities, particularly in Mosul, and attributed it to insurgents and foreign terrorists driven north to escape the surge forces. "We have seen some migration of al-Qaeda," Colonel Steph Twitty, who commanded U.S. forces in Mosul when I was there, toldThe New York Times. al-Qaeda and Sunni insurgents portray themselves as "the defenders of Sunni interests against Kurdish expansionism," the paper reported, making a conflagration all the more likely. Unlike Sunnis in Anbar, Sunnis in Ninewa have not felt al-Qaeda's social repression and so may have little disincentive to embracing al-Qaeda in the face of a perceived Kurdish threat. What's true of Mosul is doubly so in Kirkuk, which has hovered on the precipice of violent collapse for years.

Managing Arab-Kurdish acrimony in northern Iraq was always going to be a massive undertaking. In March it appeared merely ominous. With the insurgency taking root in Ninewa, it appears far worse. And with the surge forces drawing down over the next year, simply no more U.S. troops can be brought into Iraq to augment the roughly 1,000 currently in Mosul without transferring them from a different part of the country. U.S. commanders speak of bolstering Iraqi forces in the city in the event of increased sectarian violence. Those forces -- guaranteed -- will not be peacekeepers but active combatants in an Arab-Kurdish feud. And as soon as northern Iraq ignites, no political room in Baghdad will exist for any of the other arduous compromises needed for a broader reconciliation.

In days, the Kurds will be faced with a decision: What will they do now that there isn't going to be a referendum? Perhaps the Kurds will back off their more violent promises and try to secure their referendum next year. But that only delays the reckoning that will occur if and when the Kurds take Mosul and Kirkuk. And the U.S. won’t have many options for response if they do. Does Washington turn against its closest Iraqi ally or does it preside over what Arab Iraqis will justly see as the dismemberment of Iraq? Whatever choice the Bush administration makes, one thing is clear: Last March’s placidity was really just a period of phony war.